Bought 3 CM.TO 10Oct Puts @ 5.00, Mark $74.02
I’ve been watching CIBC (CM.TO) for a few months now. CM finally presented a shorting opportunity that I took today. Figure 1 speaks for itself. Furthermore, the lackluster rally in EUR/USD after the ECB’s vouch for confidence is encouraging for the bears.
CIBC (CM.TO)
$74.00 – $74.50 is a strong resistance for CM. There are three scenarios in which this trade can play out. CM can go up, go down, or move sideway.
If CM move upward, I will watch the push above $74.50. My current exit stop is at $75.00 (about $1 on the premium). However, as this is an options position. There is a time decay factor working against me. As such, I will decrease my exit stop by $1.00 on the share price every month to compensate. For example, by mid-June, my exit stop is $74.00 on the underlying share price of CM.
If CM move downward, I will move my stop to breakeven if it breaks below $72.
If CM move sideway, I will give it a month’s time. If CM just consolidates around $74, I will exit by late June for a loss of $1 ($300 total) on the premium.
My targets are $70, $68, and $65 as shown on Figure 1. I will tighten my stop passing each support level.
My ideal loss is $300 at most. That represents 3.4% of my total account on this trade.
read moreWeekly Market Review: March 22, 2009
We have touched the 800 point on the S&P500 and bounced back as everyone expected. We are still within last week’s predicted trading range between 750 – 800. Even though talks of optimism are appearing, we still haven’t been able to break the downtrend since October, see Figure 2. In fact, I unloaded my TCK longs just after the test of 800. I am now focusing on finding my best bets for the next leg up.
Rather than ending here as usual, I will analyze the various GICS sectors to get a better view of the market.
S&P 500
S&P 500
GICS SECTORS REVIEW
Below are the 6-month, 1-month, and 1-week graphic comparison of the performance of GICS10: energy (XLE), GICS15: materials (XLB), GICS20: industrials (XLI), GICS25: consumer discretionary (XLY), GICS30: consumer staples (XLP), GICS35: healthcare (XLV), GICS40: financial (XLF), GICS45: technology (XLK), GICS:50 telecommunication (IYZ), and GICS55: utilities (XLU).
Evidently, the ball is with the financials for the past few months. They have led the turn down (6-month chart) and also the bounce (1-month chart).
On Wednesday, Financial again were leading the pack in the rally. However, Energy kept the ball rolling on Thursday while the Financial were drifting down. At the other end of the spectrum, Healthcare and Utilities are against the flow as usual.
6 month: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU
1 month: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU
1 week: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU
In terms of guessing what’s to come next week. Let’s take a closer look at the financial. As you can see, we’re hanging by a tread right at the support at the moment. So if XLF is to break this support here, it’s going to take the whole market with it. Then, we’ll be breaking the 750 support for the S&P 500 and go back to the 600’s range as I’ve been saying for the past 2 weeks. This is definitely one scenario which I don’t like it to happen. As always, let’s see how the market acts next week and go with the flow. Again, watch the 750 and 800 zones.
Financial Select SPDR ETF
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